THE CHALLENGE

A major U.S. e-tailer offered drop-ship services from its manufacturers direct to U.S. customers for hundreds of products in different categories sourced from China and Europe.  Most transactions are small parcels valued at less than $800 – a key figure for procedures and fees at U.S. Customs.  Clearing and tracking hundreds of shipments had become ineffective and unwieldy.

On-going shipment delays at U.S. Customs due to missing information or improper documentation were resulting in customers not receiving their orders on time.  Because of the sheer volumes and variety of products sold, the first challenge was to develop a secure automated system that would accurately report each transaction to U.S. Customs in a timely manner. The new process had to be compliant with Trade Act of 2002 security criteria while meeting U.S. Customs airport entry requirements. To solve specific problems presented by product diversity and value assessment in real time, the system had to electronically categorize each commodity in U.S. Customs terms, while providing instant feedback for exceptions, restricted commodities or commodities with excessive values.  All processes had to ensure timely and accurate data transmissions and visibility at the specific U.S. port of entry.

THE SOLUTION

Bay noted that based on the provisions of Section 321 of the Tariff Act, small parcel imports valued at less than $800 could be entered free of duty and tax, unless there was reason to believe that a shipment was one of several lots covered by a single order or that it was sent separately for the express purpose of securing free entry by avoiding compliance with any pertinent law or regulation. Section 321 also provides that eligible entries can be entered under informal entry procedures. As a nationally permitted U.S. Customs Broker, Bay Brokerage was able to build an electronic system providing advance notifications for incoming cargo at all the required ports.  Because Bay is also a U.S. Customs Authorized Provider of Air AMS (Automated Manifest System), it was able to include notifications for air cargo while remaining fully compliant with the Trade Act.

THE RESULTS

Bay’s system eliminated unwarranted duty fees and penalties paid on hundreds of shipments from China and Europe.  Minimizing delays greatly reduced order cancellations.  On time delivery of shipments resulted in increased customer satisfaction and repeat business.